“The debate is no longer about the fear of change or aesthetics. It’s about preserving the health, safety, and welfare of communities from developers hell-bent on sticking turbines on every free acre with transmission access no matter who’s in the way. More than twelve active lawsuits are pending against wind projects in as many states, and more are sure to follow.”
U.S. voters are unhappy with the direction of the country. The big ticket issues — ISIS, Ebola, the sluggish economy — are dominating the national dialogue and will sway votes.
But for many thousands of Americans, next week’s election is deeply personal. For them it’s their best opportunity to drive back the spread of industrial-scale wind power that’s plowing through quiet communities and destroying families. On November 4th, they will be checking the box next to those candidates who promise to permanently end the wind production tax credit (PTC).
The Changing Debate
Since 2005, the wind industry has pumped millions into aggressive campaigns aimed at convincing the public that wind energy is efficient, safe, and cheap. Corporations, flush with taxpayer handouts, moved into communities with peaches-and-cream tales of how wind will clean the air, stabilize our weather, raise the wealth of the locals, and maybe buy a new fire truck. They staged open houses and pushed industry funded reports showing how turbines are quieter than the wind, have no effect on property values, and will lower energy prices.
Residents who asked questions were tagged as tea-party disrupters, Koch-brother sympathizers, or just poor souls who wished they had land to lease for a turbine. Others were reminded that state mandates for renewable energy made opposing project plans futile.
But nearly ten years later, the pain of 62,000 megawatts of installed wind has reached a tipping point.
The debate is no longer about the fear of change or aesthetics. It’s about preserving the health, safety, and welfare of communities from developers hell-bent on sticking turbines on every free acre with transmission access no matter who’s in the way. More than twelve active lawsuits are pending against wind projects in as many states and more are sure to follow.
Generating Tax Credits not Energy
When states adopted Renewable Portfolio Standards (RPS) mandating more wind be built, they forced ratepayers to buy a product that was not competitive at prices that were significantly above market. Legislators blindly believed claims that wind, with no fuel costs, would protect ratepayers from swings in fuel prices and eventually lower energy prices.
But wind, a non-dispatchable resource that’s built long distances from load and largely produces when least needed, is inherently a low-value resource. It could never be competitive in most areas of the country and would not sell but for the mandates. As RPS policies grew in popularity, so did the industry’s demand for the PTC. The PTC and RPS together guarantee big wind the capital to build projects and the customers to sell to.
After 22-years of tax credits, the business of big wind is no longer about energy production. It’s about tax avoidance. An entire industry has grown around renewable energy tax policy. When constituents reached out to their Congressional delegation for help in slowing the onslaught of the turbines, their voices were lost in the din of wall street bankers and tax attorneys demanding ‘please, sir, I want some more.’
The 2012-13 PTC Extension
Still, the wind industry has known for several years that Congressional support for the wind PTC was waning.
In 2012, neither the House nor the Senate saw fit to extend the credit when it was considered on its own merits. But Senate democrats and some republicans (Senator Grassley for one) were undeterred. On January 1, 2013, they out-maneuvered House Republicans and rammed through a tax extender bill that, five months earlier had passed out of the Finance Committee. Big wind was handed a 1-year, $12 billion gift.
By January 1, 2014, the PTC expired again but with less drama since developers were only required to show they started construction by that date. With 14,000 megawatts in the queue and very loose rules from the IRS on whether their projects would meet the ‘begin construction’ threshold for PTC eligibility, developers were sitting pretty.
Most of the pipeline will likely get built by the end of 2015 but the industry is again clamoring for the PTC to be revived retroactively to the beginning of this year.
Watching a Lame Duck
When the PTC was last extended, voters were powerless to respond as senators in a lame duck session acted behind closed doors, without debate or opportunity for amendment. Given the parallels between 2012 and 2014, voters are right to be concerned again.
As in 2012, the Senate Finance Committee passed a tax extender bill (EXPIRE) last April that was never brought to a floor vote. As in 2012, Harry Reid and Senate democrats have vowed to extend the expired tax credits during the lame duck session. And as in 2012, PTC supporters are lining up ‘must pass’ legislation to attach the PTC extension.
Senator Wyden, chair of the Senate Finance Committee, went so far as to shamelessly ask IRS Commissioner John Koskinen to write a letter itemizing the perils and risks to ordinary citizens if Congress didn’t act quickly after the election to extend the expired tax credits. You have to wonder what part of “expired” Koskinen doesn’t understand.
Voting NO Once and For All
Voters are fed up with politicians who are quick to get on board with big wind and the PTC extension. For months they’ve been confronting candidates and their staffers asking for their position on the wind PTC. They increasingly see candidates who mindlessly repeat the industry’s tired talking points as lazy, uninformed or, worse, in the pocket of big wind. Rather than have conversations about why the PTC is a harmful and dated tax policy, voters simply move on and speak with the challengers to the status quo.
Voters also don’t trust Senate Democrats, especially Senators Reid and Wyden on this issue. They know about the backroom deals. They know about the political maneuverings by the White House. And they know that House Republicans can go soft in the face of hard choices.
But this year they’re ready. This year there will be no backroom deal. The PTC will stay expired, the wind industry will adapt, and the Warren Buffets and Googles of the world will have to find other, less destructive, ways to reduce their tax burden. That is the opportunity, anyway.